Mario goes green

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Nintendo Corporation Limited was founded in 1889 as a playing card company, and since then it has evolved and become an electronic video game company. Nintendo has sold over 255 million video game consoles and 1.5 billion software units as of March 31, 2009 with annual net sales of $18.76 billion and a net income of $2.85 billion. Currently, Nintendo has operations worldwide and it employs 4,306 people.In 2006, Nintendo introduced the Wii, which has become a revolutionary console in the video game industry, famous for its use of wireless motion sensor technology.Since then, Nintendo has sold 25.95 million units of the Wii along with 204.58 million units of software for the Wii (Annual Report, 2009).

On October 1, 2009,BusinessWeekpublished itsWorld's Best Companies 2009report, listing Nintendo at the top of the list. To generate this report, BusinessWeek analyzed performances of 2,500 publicly traded corporations. To be considered in the ranking, a company must have had at least $10 billion in revenue, a quarter of which must have been coming from international sales. Companies were ranked according to their sales growth and value creation. Qualification criteria also include "commitment to innovation, diversified portfolios, aggressive expansion, strong leadership, and a clear vision for the future". From 2004 to 2008, Nintendo's sales went up by 36 percent and its value increased by 38 percent (World's Best Companies 2009). Nintendo is the only company from the video game industry included in this report. Sony and Microsoft, Nintendo's main competitors, were not even listed.

Despite the fact thatBusinessWeek named Nintendo the best company, Nintendo seems to overlook the environmental issues it creates in society. Nintendo does not have its own recycling program, nor has it taken any steps towards building more sustainable products. According to the official Nintendo website, Nintendo has contracts with vendors that ensure proper recycling and disposal of all electronic equipment, but it neither lists any of its vendors' names, nor does it mention any ways to recycle its consoles. The website has just a small part in its Frequently Asked Questions (FAQs) section, which merely mentions its recycling program. Moreover, Nintendo has not properly addressed the growing problem of e-waste.

Electronic waste, commonly referred to as "e-waste," is a term used to describe electronic products that are nearing the end of their useful life. Televisions, computers, DVD players, stereos, cell phones, fax machines, and video game units are all examples of electronic products. Most electronic products can be reused, refurbished, or recycled (Bily, 2008). However, some components of certain electronic products contain materials that render them hazardous and, as a result, must be disposed properly.These products have toxic chemicals, such as lead, mercury and cadmium, and can contaminate land over time, impacting nearby communities as well as the overall environment (Grossman, 2006). The toxins found in electronic devices can cause multiple health problems, pollute the environment, and destroy the ozone layer.

E-waste currently makes up to two percent of the total waste of the world and accounts for 70 percent of the world's total toxic waste ("Three Pathways to Greener IT," 2008). Grossman (2006) writes that about 80-85 percent of all discarded electronics is disposed in landfills.Some countries, mainly in Europe, have restricted electronic waste due to its hazardous content. In other developed countries, electronics recycling has been moved to purpose-built recycling plants under controlled conditions. However, 60 to 80 percent of e-waste collected by developed countries is shipped overseas, mostly to China, India, and Pakistan (Bily, 2008).There is little to no control on e-waste in the landfills of these less developed countries.Instead, the recycling is done by hand in scrap yards of these countries, often by children. This often violates international law.In 2005, almost half of the exported waste, including e-waste, was found to be illegal in Europe.In the United States, it is estimated that the majority of the waste collected for recycling is being exported illicitly (Grossman, 2006).However, this conduct is legal because the United States has not ratified the Basel Convention; an international treaty designed to reduce the movements of hazardous waste between nations and to prevent transfer of hazardous waste from developed countries to undeveloped countries (Basel Action Network, n.d.). In 2000, Chinabanned the import of e-waste. However, the regulation has not improved the situation because e-waste is still arriving in the city of Guiya, the main center of e-waste disposal in China. Approximately 25,000 people are working illegally at scrap yards in Delhi, India. At these locations, 10,000 to 20,000 tons of e-waste is disassembled by hand each year. Other e-waste scrap yards have been found throughout Africa and India (Grossman, 2006).

The large majority of electronic companies have started implementing recycling programs or selling green products. A green product can be defined as a product or material that is made with recycled, refurbished, or agricultural waste content, conserves natural resources, avoids toxic emissions, saves energy or water, and helps contribute to a safe, healthy environment (Grossman, 2006). Green products are environmentally preferred and they protect the environment. Moreover, green products protect the health of employees and consumers.

Greenpeace is an independent non-profit organization that works towards the preservation of the environment and monitors the green index of a company.It has a worldwide presence with regional offices in more than 30 countries and approximately 2.9 million members (Greenpeace USA, n.d.). It is one of the largest and most recognizable nonprofit organizations in the world.Due to the growing problem of e-waste in recent years, this issue has become an important priority for Greenpeace. In trying to hold electronic companies more responsible for their products, Greenpeace created the Guide to Greener Electronics.

The Guide to Greener Electronics is a ranking of the top 18 companies in the world that are manufacturers of personal computers, mobile phones, TVs, and video game consoles.The score is based on each company's policy on toxic chemicals, recycling, and climate change (Greenpeace International, 2009a). According to Greenpeace International (2009a), "the ranking criteria reflect the demands of the Toxic Tech campaign to the electronics companies." The three demands are that the companies should "clean up their products by eliminating hazardous substances, take back and recycle their products responsibly once they become obsolete, and reduce the climate impacts of their operations and products." Each demand has its own criteria for the ranking.The criteria for toxic chemical and e-waste are connected issues.Since the recyclability of a product depends on the toxic chemicals the product contains, Greenpeace weighs the toxic chemical criteria more heavily than the e-waste.Thus, if a company has a quality take back recycling program, its score might still be low if its products contain toxic substances that prevent safe recycling.

The first edition of Guide to Greener Electronics was released back in August 2006. Since then, Greenpeace has released 13 editions of the ranking with about three months in between each edition. Nintendo broke into the top 18 list in the sixth edition of the ranking, which was released in December of 2007.Nintendo received a zero in its first appearance, the first and only zero that Greenpeace has ever given to a company for the ranking.The latest edition was released in September of 2009. Nintendo increased its score to 1.4 out of 10.0 yet it was once again ranked last on the list.

In its response to the Greenpeace ranking, Nintendo stated that it decided not to participate in the survey, and since it chose not to take part, it does not consider itself graded. The argument is a logical line of reasoning, but Nintendo is trying to avoid the issue and discredit the ranking.Nintendo states that it "provides detailed information regarding its compliance to environmental laws and directives via the "Consumer Information section" of its website, and because of that, Nintendo felt that it was not obligated to be a part of the survey by Greenpeace (The News Team, 2009).However, the voluntary submission of the information to Greenpeace will only help promote Nintendo's corporate social image.

In the latest ranking, Nintendo remains in last place with a score of 1.4, up 0.4 from the previous version. The reason for this increase is that Nintendo introduced a new low-power AC adaptor for its handheld consoles.Nintendo was also able to score a point for eliminating polyvinyl chloride (PVC) in the internal wiring of its consoles (Greenpeace International, 2009b). According to Greenpeace's Guide to Greener Electronics (2009b) and Nintendo's Corporate Social Responsibility Report (2008), Nintendo has banned phthalates, cadmium, and cadmium compounds. It is monitoring the use of antimony, beryllium, and arsenic materials and compounds. Nintendo has announced that it will eventually eliminate the use of PVC altogether, but it has not set a timeline. Nintendo also lost a point due to a second year of increases in greenhouse gas emissions.This increase occurred despite a commitment by Nintendo to cut CO2 emissions and other greenhouse gases by two percent over each of the previous years. Finally, Nintendo scored a zero on all e-waste criteria.This is a large reason why its score continued to be so low.

On its website, Nintendo details ways for consumers to recycle its products.It states that customers who are looking to return all hardware and rechargeable batteries back to Nintendo for recycling can do so by contacting its office for arrangement. It claims that it is free of charge for the customers to send the hardware back to its office. This is the only place on its website where Nintendo mentions a take back program.However, this information is difficult for a user to find, and the take back program is hidden under several menus. Nowhere on Nintendo's website or its reports does the company mention that it has its own recycling center that takes care of all the returned merchandise.Nintendo does not provide any information about its recycling program or its recycling vendor(s) on its website. This lack of information can make the company look bad in the public's eyes.

Nintendo also encourages consumers to recycle products in their local areas by providing a link to the U.S. Environmental Protection Agency (EPA) website for more information on recycling programs. The entire collection of recycling information on Nintendo's website is about less than half of a page. This creates an impression that Nintendo is providing the information merely to satisfy a condition on its annual CSR report. Furthermore, this way of delivering the information can be rather confusing for the consumer.

In 2008, Greenpeace released another report called Playing Dirty (Brigden et al., 2008), which showed detailed analysis of the top three video game console companies: Sony, Nintendo, and Microsoft.This report was part of Greenpeace's search for greener electronics that focused on video game consoles.Xbox360, PlayStation 3, and Wii all tested positive for hazardous materials such as PVC and brominated flame retardants (BFRs).However, the report also stated that each console had "reduced or even avoided uses of individual hazardous substances in specific components." The report also showed that each company could replace harmful components in each of its consoles with toxic free materials.Greenpeace suggested that the three video game companies look at each other's products to see how they can develop components without harmful materials.Microsoft, Sony, and Nintendo have already eliminated or lowered the presence of different chemicals, and if these three companies worked together, they could replace all toxic substances to make their consoles greener much quicker.

Effects on Nintendo's Stakeholders

Nintendo, as it stands today with or without an implemented recycling program, affects various stakeholders across the marketplace. The major stakeholders affected by the company products are shareholders, consumers, environmental groups, media, and the general public.


According to Yahoo! Finance, the Nintendo stock prices boomed in 2007 at approximately $78.50. The stock price was high in part due to the release of the Wii. However, due to the ongoing recession and a recent drop in video game sales, Nintendo's stock has dropped to approximately $31.00 to date. Shareholders should be certainly concerned with the stock price drop. Now is the time for Nintendo to change its growth strategy and to implement new ways to improve its image and increase its stock price.

Increasing competition and a downturn in the economy have significantly impacted Nintendo's sales figures for the first half of 2009. Nintendo reported only $766.1 million in net profits for the past six months, down 52 percent from its earnings of $1.6 billion during the same period in 2008 (Kwok, 2009). Anthony Gikas, a senior analyst at Piper Jaffray & Co, stated that even with the holiday sales and the decreased price on Wii consoles, it would still be hard for Nintendo to perform as well as many people expected from it. He says that "Nintendo will fall short in the U.S. by about 2 million units this year, ending with about 8.35 million units sold, down from 10.15 million units last year" (as cited in Broek, 2009).

Currently Nintendo's main competitive edge is in its motion controller that attracts a lot of gamers to play Nintendo's games. However, this competitive edge is soon to be challenged. In 2010, Microsoft and Sony are both set to come out with their own versions of motion sensor controllers that might pose a threat to Nintendo's sales and its overall success (Newman, 2009). A thoroughly implemented green campaign can create a new competitive advantage for Nintendo that will improve the company's image and reputation. This green program will help retain current customers and attract additional consumers to its current market, resulting in a potential increase in the company's stock prices.

Shareholders should be concerned since the competition is growing not only within the current industry but also outside of it. So far, Nintendo's main competitors have been Sony with its Playstation 3 and Microsoft with its Xbox 360. However, the growing popularity of Apple's downloadable games for its iPhone and iPod Touch pose an additional threat to the company. In September 2009, Apple announced that more than two billion applications were downloaded through its Apple store. Also, out of 85,000 different applications available in the store, about 80 percent of the applications is free and include more than 21,000 games. The average cost of a Nintendo DS game is $26.00, while the average selling price of a paid game application in Apple's iTunes store is about $3.00. With an increase in online downloads, Apple's quarterly revenue has grown from $60 million to $100 million (Caulfield, 2009). These new alternatives should be alarming to Nintendo's shareholders.

Since a new recycling program might temporarily decrease shareholders returns, some shareholders might feel reluctant towards implementing a new eco-friendly policy. However, since there is a trend for eco-friendly products, other shareholders might welcome this new opportunity to go green. According to research conducted by Mark P. Sharfman, professor of strategic management, and Chitru Fernando, the Professor of Finance at Price University, companies with better environmental policies perform better in the market and attract more stockholders, thus reducing the cost of their equity capital and raising their stock prices. The shares of these companies are considered to be less risky because the companies would face less government regulation, less threats of lawsuits, and have better public images that could increase overall profits (as cited in Di Meglio, 2008). In the article "Sustainability Gets a Warmer Embrace by US Companies," Mindy S. Lubber (2007), the President of Ceres, writes, "A company that does not know how to integrate issues of sustainability into its long-term business strategy is a poorly run company and the investment community will take notice." She also mentions that companies that are successful in integrating sustainability principles exhibit an increase in their competitiveness and economic bottom line.

Some people argue that changing the products to make them more eco-friendly could also be time consuming and expensive for the company. To refute this point, Mark Tran (2006), a reporter at the Guardian U.K., states, "The one in three companies that don't have plans to become more environmentally friendly are missing out on the chance to improve their bottom lines." Furthermore, Al Gore's An Inconvenient Truth, released in May of 2006, displayed a growing trend of customers that are now buying products based on a company's environmental policy (as cited in Boyes, 2008).

In recent times, investors have had an impact on how companies have been behaving. For instance, Trillium Asset Management called on Apple shareholders to support the idea of forcing Apple to manufacture products that are green and free of hazardous toxins (MacNN, 2007). It is possible that Nintendo investors will force the firm to change its path to produce more eco-friendly products.

If Nintendo stays adamant on its current practices and does not produce eco-friendly products, chances are that Nintendo's sales will start declining and people will start buying products from greener competitors. If Nintendo is successful in introducing eco-friendly products, it can also avoid governmental regulations, offset the costs associated with greener products, and accrue a net gain, which will please the shareholders.


Video games are generally thought to be played by small children. However, a large number of gamers today include adolescents and adults. According to the report by The Entertainment Software Association (ESA) (2009), 68 percent of American households play computer and video games, and among those, 49 percent are people whose age is between 18 and 49 years old. This age group has more buying power than any other group since it represents a working class of people with disposable incomes. The young adults in this group are even more important for Nintendo since they will be potential customers for years to come. They are also becoming more educated and more exposed to environmental issues. If Nintendo wants to retain these young adults as customers, it should make an effort to produce a greener console.

It is a popular assumption among customers that eco-friendly products are more expensive. However, according to research conducted by George Mason University (2008), "15 percent of consumers routinely pay more for green products, and another 15 percent seek green products if they do not cost more." This indicates that an increase in the cost of a product does not necessarily mean lower sales for Nintendo. Many customers will be willing to buy an environmentally friendly console even if it is more expensive. Furthermore, there is no relationship between production cost and sales price of a product. Even if the manufacturing cost of a product goes up, the company does not have to increase the product's sales price. Although Nintendo might not make as much profit as it would have otherwise, its business will be more profitable in the long run since having an environmentally friendly product will generate customers' goodwill and a positive reputation.

In order to stay profitable and improve its reputation, Nintendo also needs to attract new customers and retain its current customers. The most effective way for Nintendo to achieve this is by developing a better console that uses advanced technology. According to technology news writer James Newman (2009), the average life of a Nintendo console is about six years, and in the United States no console has been in use for more than seven years without being replaced by a new generation of consoles. In an interview with Financial Times, Yoichi Wada, the CEO of the game publisher Square Enix, said that he expects a new version of Nintendo Wii to be released by 2011 (Harding, 2009). The introduction of the new Wii will make more than 26 million consoles obsolete. When a new generation console is released, there are only three options for customers: recycle the old console, throw it away, or keep it for future gaming. Many people will throw the consoles away either because it's the most convenient option or because they find it hard to obtain recycling information. In order to make more customers recycle their consoles, Nintendo needs to provide enough information on recycling of its products and create its own recycling program.

Activist Groups

Environmental groups monitor Nintendo's products for chemical substances that may be harmful to the environment and to human health. They can also raise concerns about the fact that Nintendo is not doing enough to encourage customers to recycle its products after the end of their useful life. Greenpeace, as it was mentioned before, has put Nintendo on the bottom of its list for having harmful chemicals in its products and for not having a credible recycling program. There are many other environmental organizations that monitor the company's environmental policy and publicize their findings. These studies and findings can either positively or negatively affect the sales figures of Nintendo once they are published. The activist groups can also explore their legal powers by filing class action law-suits against Nintendo if it doesn't exercise due care of its customers and the environment. Due to these reasons, Nintendo should not ignore the influence of environmental organizations.

General Public

The general public includes all gamers and non-gamers affected by Nintendo's practices. The general public has the right to safety, which means they should not be subjected to risks caused by the company products or its actions. This issue matters most in the countries where e-waste from other countries is being dumped in undisclosed locations for low fees. The most common e-waste landfills are found in China, India, and some African countries (Grossman, 2006). People who live in those areas are constantly affected by the toxic chemicals that contaminate the air and water, and as a result, have a negative impact on their living conditions.

As it was mentioned earlier, Nintendo needs to take responsibility for the e-waste it creates in the world. Nintendo needs to implement its own recycling program or hire a vendor who will provide proper recycling for Nintendo's consoles. However, just providing information or implementing a strong recycling program is not enough. There will always be consoles that make their way to the dumps and wastelands of the developing countries. Their toxicity will contaminate the local environment and harm people's health, and the only way to prevent that from happening is to have Nintendo produce greener consoles.


The media can have a significant impact on a company and its image. The public relies on the information the media provides in the news and publications. Positive feedback from the media will boost Nintendo's image, while negative reviews will diminish public perception about the company. As a leader in the video game industry, Nintendo's policies and procedures are under great public scrutiny. If Nintendo continues to ignore environmental issues surrounding Nintendo products, the media will eventually depict the company in a negative manner, harming Nintendo's reputation and decreasing its sales. However, if Nintendo comes up with a green console and more environmentally friendly products, the media will praise the company and help promote its "green" image. This will help increase Nintendo's sales and provide better customer perception for the company.


Some may argue that integrating these policies and programs into the company will incur additional costs, which might negatively impact economic efficiency and lower company profits. It is argued that these costs might be passed on to the stakeholders, mainly to customers and to shareholders. Besides this, the additional expenditures might force Nintendo to raise its product prices, making the company less competitive in the current market. Critics may also argue that the implementation of a new program will require expert knowledge and skills that Nintendo will have to acquire at an expensive price. However, the benefits will outweigh all of these costs and uncertainties in the long run.

Going green will help Nintendo improve its reputation and business value. The company's green initiatives will differentiate it in its industry and create public awareness of its business practices which will ultimately increase its sales and promote long-term profits for the business. Once Nintendo launches a green console, it can market itself as the leader in green technology of the video game industry. It can also promote its sustainability policies in order to gain positive reputation and a larger market share in the industry.

Another benefit of going green is that it discourages government regulations. As more scientists, media, and activist groups are pressuring the governments of different countries worldwide, there will eventually be more strict regulations on the video game industry regarding product contents and recycling programs. By being proactive and leading the way in these issues, Nintendo will deter governments from getting involved in its business practices.

As a leader in the video game industry, Nintendo must also acknowledge its responsibility towards society and environment. Currently, the main issues for Nintendo are to reduce e-waste and to eliminate toxic content in its consoles. Nintendo should develop a new manufacturing process using only "green" materials in its consoles. The materials should be free from toxins and other harmful chemicals and should also be easily recyclable. Nintendo should also implement a recycling program to reduce e-waste. The recycling program needs to be effective and efficient. To ensure high customer participation, Nintendo should provide a free take back program that is easily accessible by customers. Nintendo can reduce its cost of raw materials by utilizing recyclable components and by recycling old consoles. This method is called cradle-to-cradle, and it's widely used by companies that want to maximize the usefulness of their products and minimize the waste those companies create (The Dictionary of Sustainable Management, n.d.). By reducing waste and toxic substances in its products, Nintendo will correct social problems it has been contributing on the global scale.

By implementing all of these programs, Nintendo can maintain its market leadership in both sales and innovation. These steps will help Nintendo become a more responsible global corporate citizen and will make it a role-model for its competitors.


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